We have previously shown both in vitro and in vivo that the activity of rat liver phenylalanine hydroxylase can be activated by phosphorylation and deactivated by dephosphorylation. We have now demonstrated that the phosphorylation-mediated activation process can be modulated by both physiological concentrations of the enzyme's substrate, phenylalanine, and its coenzyme, tetrahydrobiopterin (BH4): phenylalanine stimulates the phosphorylation reaction and BH4 inhibits it. This regulatory mechanism would provide the organism with high phenylalanine hydoxylase activity when that activity is needed to dispose of elevated levels of phenylalanine that would be harmful to the developing brain. We have found that rat kidney phenylalanine hydroxylase, when assayed with BH4, is in a very high state of activation. As a result, the activity of this enzyme is much higher than previously realized. These results suggest that the kidney, previously believed to contribute only marginally to phenylalanine homeostasis in the whole orgaism, may play a much more important role in this process.